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REALTORS® should be aware that negotiations through text and email may bind clients to an agreement. Therefore, great caution should be used when communicating through these means unless the agent has the “express actual authority” to bind their client through such means. Express actual authority means that the client has explicitly indicated through words and/or actions that the agent may act to bind the client. Such actions may be verbal, but preferably should be documented in writing.

“Apparent authority”, which is determined by analyzing the actions of the client and whether those actions would cause a third party to reasonably believe that the client intended to be bound by the actions of the agent, is why extreme caution should be used when negotiating via text and email as you may bind your client into an agreement; irrespective of whether or not there was intent to do so - thereby creating potential liability for the client and the REALTOR® agent.

If it has been determined that an agent does in fact have the authority to bind their client, the electronic communication must still satisfy Massachusetts law and the statute of frauds in order to be binding. The statute of frauds is a legal doctrine that requires contracts for the sale of land to include all essential terms and be in writing signed by the party against whom enforcement is sought. Emails or text messages from an agent laying out the specific terms of a deal may be sufficient to satisfy the requirements of the statute of frauds. In fact, even incorporating by reference to a document containing the essential terms may be sufficient.

Two recent court cases support this assertion. In 2012, the Massachusetts Superior Court ruled in Feldberg v. Coxall that the parties could be bound if the material terms of the agreement were present and the parties had the requisite intent to enter into the agreement. Furthermore, it held that signature blocks in emails could meet the signature requirement. In May 2016, a Massachusetts Land Court ruled that a series of text messages can satisfy the Statute of Frauds and bind parties to a real estate transaction.

The 2016 case, St. John’s Holdings, LLC v. Two Electronics, LLC , involved a dispute between two businesses for the purchase of a commercial property. Over the course of several weeks the parties negotiated an unsigned “Binding Letter of Intent” through their respective brokers via email and text messages. Included in an email exchange, which included the brokers’ respective email signatures, was an email from the listing broker stating that the seller was “ready to do this.” The listing broker then followed up with a text message to the buyer’s broker, telling the buyer to sign the Letter of Intent, as prepared by the seller, and submit a deposit, which the buyer did. Some of the text messages included signatures on a first name basis, but not all of them did. During these negotiations, however, the seller received and accepted a higher offer from a different buyer and refused to sign the Letter of Intent with the buyer. Immediately, the buyer sought to enforce the Letter of Intent in a Massachusetts Land Court, arguing that the Letter of Intent was binding based on the exchange of emails and text messages between the real estate brokers and included all material terms of the contract. The seller, on the other hand, argued that the text messages were merely negotiations and further, did not include the required signature from the seller.

The judge sided with the buyer, ruling that the text messages, in addition to the emails, satisfied the statute of frauds and amounted to a binding contract. In reaching his decision, the judge considered all of the email and text messages as whole. “Under the Statute of Frauds, multiple writings relating to the subject matter of the agreement may be read together as long as the writings, when considered as a single instrument, contain all the material terms of the contract.” Additionally, he held that the signatures in the text messages were enough to authenticate the seller: “Typing their names at the end of certain messages containing material terms, but declining to do so for more informal discussions, is indicative that the parties chose to be bound by those signed communications.”

What REALTORS® Can Do to the Protect Themselves
Unless a client has expressly authorized you to make an agreement on their behalf, REALTORS® should consider including a disclaimer at the bottom of emails that include proposed terms for an agreement. Adding a disclaimer, such as: “Nothing in this email is intended to create a binding contract for the purchase or sale of real estate. The sender of this email does not have authority to bind a client [buyer or seller] to an agreement via written or oral communications, including by email." when it accurately describes the agent’s authority, will avoid unintended consequences of email communications.

When communicating through text message, it is wise to make similar statements in the beginning of the negotiations. An even wiser approach would be to discontinue negotiating terms through text messages all together.

Can an Email or Text Message from a REALTOR® Bind a Client to a Transaction?

On Monday March 5th the Cambridge City Council rejected enacting local by-laws that would restrict the sale of property by a vote of 6-3. Specifically, the measure proposed creating a right of first refusal that would allow tenants to join together and purchase their residential building should their landlord decide to sell. Cambridge City Councilors who opposed the measure were Mayor Marc C. McGovern, Vice Mayor Jan Devereux, Craig A. Kelley, Alanna M. Mallon, E. Denise Simmons, and Timothy J. Toomey, Jr.

The Cambridge proposal was similar legislation pending at the State House, Bill H. 3017, An Act to Preserve Affordable Housing Through a Local Option Tenant’s Right to Purchase.
GBREB has strongly opposed H.3017 which is modeled after the Tenant Opportunity Purchase Act (TOPA) law in Washington D.C. The Greater Boston Real Estate Board (GBREB) has raised numerous objections to the creation of a right of first refusal law including complicating loans and clouding title insurance, complicating previously routine transfers of interest among individuals, families or business entities that own housing and delaying the sale of homes and multifamily property.

Although, H.3017 was referred to a study at the State House effectively stopping progress of the bill for this session, discussions are still ongoing in Somerville on how to advance the issue locally.

Despite plummeting temperatures and seasonal interruptions, the Greater Boston housing market showed little few signs of cooling down in January, as home and condo sales remained near record levels and home prices continued to rise amidst a continued shortage of supply of homes for sale, according to data issued today from the Greater Boston Association of REALTORS® (GBAR).

The detached single-family home market saw a slight decline in sales in January as 787 homes were sold last month compared to the 836 homes sold in January 2017. This is a 5.9 percent drop; however, it is the fifth highest sales total on record, and remains above the 15-year historical sales average for January of 699 homes sold. In the condo market, sales experienced a more modest decrease in sales volume of 2.2 percent last month from 624 condos sold in January 2017 to 610 sold last month. This was also comfortably above the monthly average of 537 sold condos and is the fourth highest sales total on record for the month.

“The cold winter weather and distractions of the holidays did little to diminish buyer interest and enthusiasm over the past month,” said GBAR Marie Presti, broker-owner of The Presti Group in Newton. “If anything, with inventory in short supply, buyers appear more motivated than ever with a new home at the top of their shopping list for the new year,” she added.

Indeed, inventory lagged as active listings in both markets experienced significant declines last month. Active listings of single family homes fell 24.3 percent from 2,014 homes for sale in January 2017 to 1,525 on market last month. Likewise, the condo market saw a 19.9 percent decline in active listings, dropping to 1,173 on market from 1,465 units on the market in January 2017.

Not surprisingly, with the drop in available listings, the median sales price of single family homes increased to $551,000 last month, an increase of 6.0 percent from the January 2017 median sales price of $520,000. Likewise, the condo median sale price rose 3.0 percent from $505,000 in January 2017 to $520,000 this year. These are both record high median sales prices for the month of January.

“For those looking to get maximum value for their home, today’s record high home prices make the upcoming spring market an ideal time to consider listing a home for sale,” stated Presti. The growth in home prices isn’t particularly bad news for home buyers either, according to Presti. “The steady price appreciation occurring in the market is not excessive. It is justified and appropriate given the limited supply of homes for sale, so most industry observers believe there is little risk for a price bubble at this time,” she asserted.

With mortgage rates still low, most buyers remain unfazed by the upward pressure on housing costs, Presti noted. As a result, she predicts another active spring selling season. “There’s an urgency for many buyers to purchase a home before mortgage rates get much higher, and that fact along with this winter’s modest snowfall should provide an early start to the spring market,” she commented.

Each year since 2000, the National Association of REALTORS® (NAR) has recognized 30 members across the nation, under the age of 30 who have demonstrated innovative business savviness, skill, success, creativity, leadership and community involvement throughout their early real estate careers.

This week, GBAR members Randy Horn of Compass Massachusetts in Boston and Nicole Rideout of Gibson Sotheby’s International Realty in Boston were named as part of the 50 finalists vying for a seat in REALTOR® Magazine’s 30 Under 30 Class of 2018.

Starting next Friday, March 16 and through 11:00 a.m. on Friday, March 23, members of the public can vote (once per every 24 hours) for their favorite finalist to receive the Web Choice Award. The finalist who receives the most votes is guaranteed a spot among this year’s 30 Under 30. The magazine’s panel of judges will select the remaining 29 honorees from the finalists. The 30 Under 30 Class of 2018 will be featured in the May/June issue of REALTOR® Magazine.

Following the passage of the Tax Cuts & Jobs Act, the Internal Revenue Service (IRS) issued a news release clarifying that in many cases, interest paid on home equity loans remains deductible under the new tax reform law. Many questions have arisen on this issue, as many media reports on the new tax law indicated that as of 2018, interest is no longer deductible on home equity loans.
In the release, the IRS stated that “despite newly-enacted restrictions on home mortgages, taxpayers can often still deduct interest on a home equity loan, home equity line of credit (HELOC) or second mortgage, regardless of how the loan is labelled.” The key factor is that the proceeds of such loans must be used to buy, build, or substantially improve the taxpayer’s home that secures the loan. Interest on a home equity or other loan used for personal living expenses (e.g. paying off credit card debt, education, or vacation expenses) would not be deductible.

Would you like to have an active voice in setting policy and being a decision maker for the REALTOR® organization on the state level?

Or, do you know a well-qualified colleague who should be considered for a leadership role with our state association? If so, we invite you to submit a nomination form for yourself or a fellow REALTOR® for the position of Greater Boston Regional Representative to the Massachusetts Association of REALTORS® (MAR).

This role serves a two-year term on the MAR Board of Directors and Executive Committee. This elected office holder presides at each regional caucus of the MAR Directors and oversees the coordination of state REALTOR® association objectives and activities. The Regional Representative holds a seat on the GBAR Board of Directors and Executive Committee.

Greater Boston Association of REALTORS®

The Greater Boston Association of REALTORS® (GBAR) is the largest local REALTOR® association in New England and among the top 25 largest nationally. We count more than 9,500 residential real estate agents, brokers, and industry affiliates as members in a territory that includes 64 communities in Eastern Massachusetts, which also makes us the largest of five divisions that comprise the Greater Boston Real Estate Board (GBREB).